A branch of the world's largest gold mining company has gone on trial in Indonesia on charges that it polluted the waters of an Indonesian island, causing health problems for nearby residents. The case is being watched closely by both environmental groups and foreign investors.

The trial of the Indonesian subsidiary of U.S.-based Newmont Mining Company opened Friday in Manado, the capital of Sulawesi province, 2,000 kilometers northeast of Jakarta.

Chief Prosecutor Robert Ilat read the indictment, which accuses the company of polluting the waters of Bulat Bay near the mine on Sulawesi island. The company director, American Richard Ness, is also charged, and faces up to 10 years in prison if convicted.

Mr. Ilat told VOA that Friday's hearing was only the beginning. "With respect to the hearing, the prosecutor is confident that there is a violation of the law but, again, it's subject to the court process," he said.

The prosecution charges that Mr. Ness's company poisoned the bay with mercury and arsenic, causing local villagers to fall ill with skin and nerve diseases. Indonesian news media have reported in the widely publicized case that some 30 villagers died.

However, Mr. Ness denies that the company caused any pollution, and his spokesman, Rubi Purnomo, told VOA he is confident of being acquitted. "Based on all the science, over 10 studies, 10 independent studies, that have been done over there, we believe that there is no pollution."

The company, which operated the mine from 1996 until last year, says studies by the World Health Organization and the Indonesian government also showed no pollution. It says any disease was due to pollution caused by illegal miners or poor sanitation practices.

The case is being closely followed by Indonesian environmental groups, who accuse the government of ignoring environmental destruction by wealthy corporations.

Foreign investors, who already complain of corruption and slow government bureaucracy, say a conviction could affect their future plans in Indonesia.